BOSTON (Reuters) – Melvin Capital, the hedge fund at the heart of the GameStop drama, lost 53% in January but received promises of new money from investors in the last days of the month, a source familiar with the report said. Sunday property.
Melvin ended up in January with more than $ 8 billion in assets after starting the year with about $ 12.5 billion in funds, the source said.
The company, founded in 2014 by Gabe Plotkin, had promised to drop the stock of GameStop, a video game retailer that traded at less than $ 5 five months ago. But a wave of retail investors, comparing notes on Reddit’s social media platform and using Robinhood’s online trading app, took the other side of Plotkin’s trade to put the stock up 1,625% on the this month to close at $ 325 on Friday.
The Wall Street Journal first reported the loss.
Hedge funds Point72 Asset Management and Citadel posted a $ 2.75 billion capital infusion to Melvin Capital earlier in the week, allowing it to close that position with a huge loss.
“The liquidity of the asset’s portfolio is strong. Leverage usage is at its lowest level since Melvin Capital began in 2014, ”said the source.
Citadel lost less than 1% on Melvin’s position in its main asset in January, someone familiar with the deal said Sunday.
As news of a loss at many hedge funds in the past few days spread, there was speculation about the companies potentially closing their doors. Several investors and fund managers said clients have become more patient with particular companies that have a long and strong history, possibly allowing them to survive a deep loss this month.
Reciting with Svea Herbst-Bayliss; Edited by Daniel Wallis